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The oversupply of oil and other natural resources—and the surge in the value of the US dollar—have proved to constitute a double whammy for Latin America. The glut has pushed down prices. The decline has been made worse by the stronger greenback, the currency that is used to settle most oil trades. The plunge in commodities prices, in turn, has throttled a region that generates a good deal of revenue from the sale of natural resources. Indeed, following a decade of solid—sometimes spectacular—economic growth, Latin America has hit a very thorny patch. Or at least part of it has.

In reality, the picture is substantially different depending on which side of the continent you’re talking about, Most of the countries that face the Atlantic Ocean are doing poorly. Brazil, the region’s largest economy, is suffering its worst recession in 25 years. Only Venezuela, which has been on a downward slide for quite a while, is doing worse. Argentina is in the middle of a tepid recovery. Conversely, the Pacific-facing countries—mainly the four trading partners in the Pacific Alliance—are looking better. While each of the four nations (Peru, Columbia, Mexico and Chile) has lowered its GDP forecast, the countries remain on track for solid expansion. Peru and Colombia particularly stand out.

The relatively upbeat prospects for the Pacific Alliance nations, however, tend to get lost in the overall economic numbers for the region. Gross domestic production in Latin America and the Caribbean more than halved to 1.3% in 2014, down from 2.9% in 2013. For this year, the International Monetary Fund sees a further slowdown in economic output to 0.5%. Forecasts collected by survey firm Consensus Economics tell a bleaker tale. Latin America and the Caribbean could see flat growth in 2015.

Peru, on the other hand, is expected to generate a 3.1% hike in GDP growth in 2015. “It is difficult to put all countries in the same basket,” cautions Alonso Cervera, head of Latin American Economics at Credit Suisse. “I think that there are problem cases, there are success stories, and there are middle-of-the-pack countries. You have to look at each country independently, as opposed to drawing your own conclusion from GDP-weighted averages.”

“I think that there are problem cases, there are success stories, and there are middle- of-the-pack countries.”

~ Alonso Cervera, Credit Suisse

One thing that does apply to most of the countries in Latin America: The heady days of the commodities supercycle that jacked up the prices of natural resources in the early 2000s are gone.

“The region could pick up over the medium term,” says Edward Glossop, emerging markets economist at Capital Economics in London. “But it is going to remain weaker than the past decade of the commodities boom.”

HIGH INFLATION, LOW CONFIDENCE

Brazil remains by far the biggest worry in the region. The drop in commodities prices has been a big blow to the big country. A stubborn fiscal deficit hasn’t helped. Worse, the nation has been paralyzed by a deep political crisis. The unrest was triggered by allegations that legislators and political parties received kickbacks from state-owned oil giant Petrobras. The scandal has brought proceedings in Brasília, the nation’s capital, to a virtual halt, leading to a reduction in government spending. The situation has been inflamed by an inflation rate running at more than 9%—the highest level in Brazil in 12 years.

All have combined to slam the country’s economy. In a Consensus Economics report, more than 20 panelists predicted a 1.6% contraction in GDP for this year. The report noted, “Expectations have continued to slide amid further signs of weakness.” José Francisco de Lima Gonçalves, chief economist at Banco Fator in São Paulo, now believes GDP in Brazil will contract this year between 2.5% and 3.0%. He also expects the recession to spill over into 2016, at least for the first two quarters.

It could drag out longer. Fears that current president Dilma Rousseff will be impeached seem somewhat overblown, but the approval rating for the second-term president has plunged to 7%, sapping her political clout. “If anything,” Gonçalves warns, “there is a downside risk, and things can be even worse.”

July Survey

Real GDP

Consumer prices

2014

2015

2016

2014

2015

2016

Argentina

0.5

0.5

1.3

24

17.2

25.6

Bolivia

5.3

4.6

4.7

5.2

4.9

5.3

Brazil

0.1

-1.6

0.6

6.4

8.9

5.5

Chile

1.9

2.4

3

4.6

3.7

3.1

Colombia

4.6

3.1

3.3

3.7

3.9

3.2

Costa Rica

3.5

3

3.7

5.1

2.3

4.5

Dominican Republic

7.3

5.1

4.7

1.6

1.7

3

Ecuador

3.8

1.6

2.7

3.7

4.2

3.8

El Salvador

2

2.3

2.3

0.5

1.2

2

Guatemala

4.2

3.9

3.6

2.9

2.9

3.6

Honduras

3.1

3.4

3.5

5.8

5.6

4.2

Mexico

2.1

2.6

3.2

4.1

2.9

3.4

Nicaragua

4.7

4.4

4.7

6.5

5.1

6.5

Panama

6.2

6

6.1

2.6

2.1

2.8

Paraguay

4.4

4

3.9

4.2

3.8

4.1

Peru

2.4

3.1

4.2

3.2

3.3

2.8

Uruguay

3.5

2.8

3.2

8.3

7.8

7.3

Venezuela

-3

-6.4

-2.7

64.7

133.5

111.3

Latam

1

0

1.5

13

20.3

17.5

Latam ex Venezuela

1.5

0.7

2

7

7

6.5

A substantial slide in the value of the country’s currency could provide some relief, however. The real is down more than 50% against the US dollar this year. A weaker real makes the country’s exports cheaper, which should spark some life into the Brazilian economy, although the process could take years. “Some of our manufacturers have survived years of overvalued currency and now can recover some of the lost business,” Gonçalves notes. “There are a few signs that this is already happening. It could help to recover tax revenue and help the public fiscal deficit.”

Weakening currencies in most Latin American nations should boost exports for the region. Glossop at Capital Economics also points out that Latin America has a much lower level of external debt denominated in US dollar than in the past.